Berlin–With continued declines in earnings and sales, the second quarter of fiscal 2009 brought no relief to Escada’s battered bottom line.
In the three months to April 30, 2009, the struggling German fashion house reported a pre-tax loss of 16.3 million euros, or $21.2 million, for the Escada business unit, compared to a pre-tax profit of 3.5 million euros, or $4.6 million in the same period a year earlier. All dollar figures are converted from the euro at an average exchange rate for the respective period.
The Primera unit, which was recently divested and encompassed Laurèl, Apriori, Cavita and Biba, is not included in these calculations. Escada did not release pre-tax earnings for the entire Group.
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However, including Primera’s operations, Escada reported an after-tax loss of 82.6 million euros, or $107.6 million in the second quarter, compared to an after-tax loss of 4.9 million euros, or $6.4 million, the year before. Escada attributed the steep decline to a write-down on assets of 55.1 million euros relating to the divestment, as required by German law.
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Second-quarter sales for the Escada business fell 33.1 percent to 68.2 million euros, or $88.8 million. Sales for the Escada brand fell 27.5 percent to 66 million euros or $86 million. Adjusted for currency effects, Escada brand sales were down 30.8 percent in the quarter, the company said.
Escada’s future remains extremely clouded. The company said it requires 30 million euros to remain liquid during the current fiscal year, though industry observers suggest funds could run out as soon as the end of July.
At the end of April, Escada announced a major financial restructuring and recapitalization plan which it said is necessary to ensure its survival. This includes a cash capital increase, a restructuring of a 200 million euro bond issue due in 2012, renegotiating existing and future credit lines and also calls for creditors to take a cut in repayment. No measures have been finalized to date. Escada said it plans to have the restructuring completed sometime in July 2009.